LIC bonds to fund Mumbai Metro projects?
MMRDA had earlier put the auction of BKC land parcels on hold after HC order.
Mumbai: After keeping the auction of land parcels at Bandra-Kurla Complex (BKC) in cold storage, the Mumbai Metropolitan Region Development Authority (MMRDA) is now exploring the option of raising funds for the proposed Metro corridors by raising bonds through the Life Insurance Corporation of India (LIC).
The MMRDA has put the auctioning of its land parcels in BKC on hold after the Bombay high court in February 2016 directed the Brihanmumbai Municipal Corporation (BMC) to not give permission for the construction of any new commercial or residential buildings in the city till all the rules of solid waste management are complied with.
Pravin Darade, additional metropolitan commissioner, MMRDA, said, “We are in talks with LIC for raising funds via bonds. Once the final decision is taken, the money raised through bonds would be used for the construction of proposed Metro corridors in the MMR. Also, we will ultimately auction the plots at BKC, but currently there are certain unfavourable market conditions which would make it difficult to get good returns.”
A bond is a form of loan wherein the holder of the bond is the lender (creditor) and the issuer of the bond is the borrower (debtor). Bonds provide the borrower with funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure.
Another MMRDA official said that the authority is also studying legal aspects so as to ascertain whether it can raise funds through bonds like that of the Maharashtra State Road Development Corporation (MSRDC). “MSRDC comes under the purview of the companies Act, whereas MMRDA does not. So, we are studying relevant legal aspects, after which we will take an appropriate decision.”
The MMRDA currently has Rs 17,000 crore in its bank accounts, for which it gets interest of around 7-8 per cent every 12 months over fixed deposits. The MMRDA official said, “Once we start with civil work for the construction of several Metro corridors, we may need more than what we have currently. A sum of Rs 60,000 crore at least is what the MMRDA needs to fund its various infrastructure projects, like that of MTHL and several Metro corridors.”
‘Plot’ thickens:
MMRDA has a 12,500-square-metre plot at ‘G’ Block in BKC, for which it has quoted a base auction price of Rs 1,475 crore. Another plot owned by the MMRDA is located in Wadala, near the Wadala monorail depot. Plans to monetise this plot are also in the pipeline.